Less dependence on defense work

CFB Forecast: Due to defense cutbacks the training and simulation industry of Central Florida have broadened their business model.

CFB Forecast: Due to defense cutbacks the training and simulation industry of Central Florida have broadened their business model.

Richard Burnett, Orlando Sentinel

From military training contractors to commercial web app developers, many players in Central Florida's high-tech sector expect to make 2014 a year of thinking outside the box.

The region's training and simulation industry — considered the largest in the country — is venturing outside its historic comfort zone of warfare training. A number of simulation companies have found creative new ways to ply their trade, including virtual surgery, auto maintenance, transportation, video games and theme-park attractions.

Such moves not only make good business sense, but are a matter of survival as the defense budget faces more than $30 billion in spending cuts in 2014. It was spared a bigger hit after Congress passed a bipartisan budget deal in late 2013 that reduced the earlier planned cuts by 40 percent.

The next round will still be big enough to prompt even more diversification, experts say.

"There's plenty of motivation in the defense industry to look for new business as the budgets decline," said Michael Blades, a defense analyst who tracks the simulation industry for the Frost & Sullivan consulting firm. "Basically, there are two things companies can do: Figure out how to make new training products or continue to do what they already do, but for overseas markets."

The simulation industry's foray into non-defense work has opened new doors for some of the military contractors. The Orlando Science Center, for example, showcases a number of companies from Central Florida and elsewhere as part of its annual Otronicon digital media convention, which runs through Monday.

After last year's convention, the center added one of the more popular exhibits – the Virtusphere – to its Space and Science Hall. The large sphere, which resembles a mini-Epcot dome, contains a moving platform where people can don a headset and experience full-motion virtual reality. Originally developed for military training, the system is produced by Virtusphere Inc. of New York, which works with a number of Central Florida companies.

Other simulation companies have also targeted the entertainment and theme park markets. Orlando-based Engineering and Computer Simulations Inc., for example, said it expects to sign its first deal with Walt Disney World in 2014. ECS develops interactive digital training programs for military and commercial customers. It is also negotiating a new rail operations training deal with CSX Corp.

Meanwhile, other sectors of Central Florida's high-tech industry also have branched out into a broad range of new technologies, from new mobile apps, Internet software and germ-proof medical garb to microchip coatings and green energy systems.

Citing the metro area's "startup culture" in digital media and web app development, veteran Silicon Valley marketing expert Dan Blacharski named Orlando as one of the country's "most promising tech hubs of 2014," an annual list published on his website techie.com.

"We look for places that are a little bit unexpected; areas that are certainly outside the usual Silicon Valley conversation," he said. "Orlando caught our eye. What we saw there was the emergence of an entrepreneurial culture, a sense of creativity and buzz; a lot of exciting things happening there."

Storm clouds: The simulation industry may still feel pain from Pentagon's $30 billion in budget cuts. Simulation experts fear base-closing talks could snag the military training contracting complex at Central Florida Research Park. Federal spending cuts could hurt research efforts at Medical City and the University of Central Florida.

Trends to watch: Orlando defense firms will aim at foreign military sales. High-tech entrepreneurs will fuel small-business movement in smartphone apps, energy systems and health-care technology. Defense training firms will diversify into the theme-park business and other commercial applications.